Following the passage of the Affordable Care Act (ACA), the Pharmaceutical Research and Manufacturers of America’s (PhRMA) issued this official statement
“We believe comprehensive health care reform will benefit patients and the future of America. That’s why we have been involved in this important public policy debate for more than a year and why we supported the final health care reform bill and the amendments found in the reconciliation legislation…. But throughout this long process, we have been guided by a belief that all Americans should have access to high-quality, affordable health care coverage and services. This legislation, while not perfect, is a step in that direction…. Even as we support health care reform legislation, we continue to have concerns about a number of issues including the overly broad powers of a non-elected Independent Payment Advisory Board (IPAB), which could enact sweeping Medicare changes without action by Congress and would not be subject to judicial or administrative review. We look forward to working with Congress to address these concerns and to identify ways to contain medical costs without creating new barriers to quality health care.”
PhRMA believes that expanding coverage to more than 30 million uninsured Americans was a step in the right direction, and it issued a statement in December 2009 stating that it supported efforts to put an end to practices such as denying coverage because of pre-existing conditions or charging higher premiums because of gender.
Part D Coverage Gap
The Accountable Care Act (ACA), Section 3301, as modified by Section 1101 of Health Care and Education Reconciliation Act of 2010 (HCERA), established a Medicare coverage discount program beginning in 2011, in which drug manufactures were required to provide a 50 percent discount of negotiated prices on brand-name drugs for Part D enrollees with expenditures in the coverage gap—known as the “donut hole”. Upon it’s passage, PhRMA Senior Vice President Ken Johnson issued the following statement:
“America’s pharmaceutical research and biotechnology companies firmly support the Part D coverage gap discount program and are committed to working with the Centers for Medicare & Medicaid Services (CMS) to ensure the program begins in 2011, as set forth in the new health care reform law. The discount program will provide access to needed medicines by reducing out-of-pocket costs for eligible Medicare beneficiaries in the coverage gap. Therefore, successful and timely implementation of the program is extremely important. PhRMA will continue to consult with CMS, as expressly contemplated in the health care reform law, to identify and address any potential obstacles to timely implementation of the discount program.”
At the end of 2011, the Department of Health and Human Services (DHHS) reported that since the implementation of the 50 percent prescription drug discount program, nearly 900,000 seniors have saved $461 million on their prescriptions.
Increased Prescription Drug Rebates
As part of its commitment to comprehensive health care reform, pharmaceutical companies pledged to reduce health care costs by agreeing to “help eligible seniors and disabled Americans who hit the so-called ‘donut hole’ in Medicare Part D cut their out-of-pocket expenses on brand-name medications in half.” To that end, PhRMA supported an ACA provision that shifts more of prescription drug costs to drug-makers and pharmacies by increasing from 15 percent to 23 percent the rebates paid by brand-name drug-makers on the average price they charge for their medicines, and increasing rebates from 11 percent to 13 percent of average prices for generic-drug manufacturers. The final rule was issued on January 27, 2012, and the Centers for Medicare & Medicaid Services (CMS) predicts that it will reduce the government’s Medicaid spending on prescription drugs by $17.7 billion over the next five years. In 2009, Medicaid spent about $26 billion for drugs, and recouped $9 billion in rebates, according to a report from the Office of Inspector General for the DHHS.
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What Is the Physician Payment Sunshine Act?
What Health Reforms Does the Pharmaceutical Research and Manufacturers of America’s (PhRMA) Oppose?